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An eligible entity should apply fresh-start reporting at the later of (1) the date that the Court has confirmed its reorganization plan or (2) the date that all material, unresolved conditions precedent to the plan’s becoming binding are resolved. ASC 852-10-45-17 and ASC 852-10-45-18 provide guidance on the financial reporting when entities emerge from Chapter 11 reorganization.

ASC 852-10-45-17

Entities whose plans have been confirmed by the court and have thereby emerged from Chapter 11 shall apply the reporting principles in paragraphs 852-10-45-19 through 45-29 as of the confirmation date or as of a later date, as discussed in the following paragraph, when all material conditions precedent to the plan's becoming binding are resolved.

ASC 852-10-45-18

The effects of a plan should be included in the entity's financial statements as of the date the plan is confirmed. However, inclusion shall be delayed to a date not later than the effective date if there is a material unsatisfied condition precedent to the plan's becoming binding on all the parties in interest or if there is a stay pending appeal. That might occur, for example, if obtaining financing for the plan or for the transfer of material assets to the debtor by a third party is a condition to the plan's becoming effective. Financial statements prepared as of the date after the parties in interest have approved a plan through the voting process, and issued after the plan has been confirmed by the court, shall report the effects of the plan if there are no material unsatisfied conditions.

Question BLG 4-1 addresses when a reporting entity should adopt fresh-start reporting.
Question BLG 4-1
Can a reporting entity in bankruptcy with a quarter-end of March 31 adopt fresh-start reporting in its March 31 financial statements when the Bankruptcy Court has approved the reporting entity's reorganization plan prior to March 31, but a material condition precedent to the plan (e.g., obtaining financing for the plan) remains unresolved?
PwC response
No. Even though the reporting entity's plan is "approved" by the Court as of March 31, ASC 852-10-45-17 clarifies that adoption of fresh-start reporting should not occur until all material conditions precedent to the plan becoming binding are resolved. Obtaining exit financing is usually considered a material condition. Therefore, the reporting entity should not adopt fresh-start reporting in its March 31 financial statements, but should consider providing appropriate subsequent events pro forma disclosures reflecting its expected emergence and the effect it will have on the reporting entity's financial statements.
See BLG 4.5.7 for discussion of subsequent event disclosures.

As a practical matter, entities may choose a period-end date near the confirmation date to use as the date for applying fresh-start reporting to eliminate the need to perform the period-end financial reporting process twice within the same month (upon emergence and again at month-end). The use of a "convenience date" near the plan's effective date may be permissible if it does not have a material effect on the financial statements and no material transaction has occurred between the convenience date and emergence date. When considering materiality, a reporting entity should ensure it is assessing both quantitative metrics, such as net income, revenues, and expenses in the predecessor and successor periods, and qualitative factors, such as debt covenant compliance and the impact on employee compensation arrangements. A materiality assessment should consider the impact of using a convenience date together with the effect of other errors in the financial statements.
For example, assume a reporting entity's plan of reorganization is confirmed on April 27 and the reporting entity has a calendar month-end close date. The reporting entity may adopt fresh-start reporting as of April 30 if operating results since April 27 are not material to either the predecessor or successor periods. In this circumstance, the reporting entity should date its financial statements as of and for the period ended April 27 (i.e., the date of emergence) but would include the immaterial results of operations for the three-day period between April 27 and 30 in its pre-emergence reporting period. A reporting entity should consider the impact of fresh-start accounting adjustments (e.g., the effects of the forgiveness of debt, adjustments to reported amounts of assets and liabilities) in its materiality assessment when deciding whether or not it can utilize a convenience date.
The initial successor period should not include the effects (e.g., gain) of emerging from bankruptcy and fresh-start adjustments. For this reason, the use of a convenience date that crosses the end of an annual (or quarterly, in the case of a public company) financial reporting period is limited as the fresh-start adjustments should not be reported in a financial reporting period prior to the actual adoption. For example, if the reporting entity's annual or quarterly period end is April 30 and the reorganization plan was confirmed as of May 3, the reporting entity should not use a convenience date as of April 30 and record the effects of emerging from bankruptcy in its financial statements for the period ended April 30. Example BLG 4-1 demonstrates this point.
Use of convenience date near a period-end
Company A is a calendar year-end reporting entity. On January 3, 20X2, Company A emerged from bankruptcy and applied fresh-start reporting in accordance with ASC 852-10. The last day of the predecessor's operations is January 2, 20X2 (the date the plan of reorganization was confirmed). Therefore, Company A would have predecessor financial statements as of and for the year ended December 31, 20X1 and two-day period ended January 2, 20X2.
Can Company A apply the effects of the fresh-start adjustments in its December 31, 20X1, financial statements?
Companies may not use a convenience date for the adoption of fresh-start accounting that crosses a reporting period end. The effects of any fresh-start adjustments should be recorded in the final predecessor statement of operations in the financial statement period that includes the date of emergence from bankruptcy. Therefore, in this instance, the adjustments pursuant to fresh-start reporting would be recorded during the two-day period ended January 2, 20X2, the final day of the predecessor's operating results. The December 31, 20X1, financial statements should not include the effects from the emergence of bankruptcy. However, Company A should consider including subsequent events disclosure regarding its emergence from bankruptcy and presenting a December 31, 20X1 pro forma balance sheet reflecting the anticipated effect of applying fresh-start reporting. See BLG 4.5.7 for discussion of subsequent events disclosures.

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